Financing Renewable Energy with CLEAN Programs

1. Financing Renewable Energy with CLEAN Programs December 6, 2011 Casey Johnston Renewable Energy Program Director ICLEI USA

2. Today’s Webinar Goal: Ensure participants have a foundational understanding of what a CLEAN program is and what the Local Clean Program Guide offers local governments. • Agenda: • Welcome and Introductions • Introduction to CLEAN Programs • CLEAN Programs for US Cities • Gainesville Feed in Tariff Program • Introduction to Local Clean Program Guide • Q&A - Webinar Participants   • Closing

3. ICLEI’s Mission Our mission is to build, serve, and drive a movement of local governments to advance deep reductions in greenhouse gas emissions and achieve tangible improvements in local sustainability.

4. Solar Outreach Partnership • In 2010, the International City/County Management Association (ICMA) and ICLEI-Local Governments for Sustainability were competitively selected by DOE to conduct outreach to local governments across the United States, enabling them to replicate successful solar practices and quickly expand local adoption of solar energy. • For more information visit www.solaramericacommunities.energy.gov.

5. Relevant Tools and Resources • Local CLEAN Program Guide http://www.clean-coalition.org/local-action Solar Powering Your Community: A Guide for Local Governments (2011) http://solaramericacommunities.energy.gov/resources/guide_for_local_governments/ Dsire Solar Policy Guide: A Resource for State Policy Makers http://www.dsireusa.org/solar/solarpolicyguide/

6. The Local CLEAN Program Guide Free download:http://www.Clean-Coalition.org/local-action Structure of the Guide: Module 1: Overview & Key Considerations Module 2: Establishing CLEAN Contract Prices Module 3: Evaluating Avoided Costs Module 4: Determining Program Size & Cost Impact Module 5: Estimating CLEAN Economic Benefits Module 6: Designing CLEAN Policies & Procedures Module 7: Gaining Support for a CLEAN Program

7. Introductions • Today’s Speakers • Wilson Rickerson - Meister Consulting Group, CEO • PegeenHanrahan - Community and Conservation Solutions, Principal • Craig Lewis - Clean Coalition, Executive Director • Bill Shepherd – Gainesville Regional Utility, Energy & Business Services Manager

8. What is a feed-in tariff? • Four parts “feed” • Utility must interconnect you (and yougo to the front of the line) • Utility must buy 100% of your power • Utility must transmit or “dispatch” yourpower before fossil fuels • You get a standard contract • One part “tariff” • A $/kWh price available to all comers CLEAN!

9. Countries with FITs in 2011 Countries with national FITs Countries with regional FITs 9 Source: REN21, Renewables 2010 Global Status Report

10. GLOBAL INSTALLED CAPACITY BY INCENTIVE TYPE (%) Source: Bloomberg New Energy Finance Wind Solar

11. Market Growth in Germany • 5.4% renewables in 1999 to 16.1% by 2009 • 30% by 2020 target • 38.6% actual projection (18.5% wind, 7% PV) • 50% by 2030 • 65% by 2040 • 80% by 2050 The argument is between 80% renewable electricity and 100% renewable electricity

13. US Has Far Better Solar Resource than Germany Source: NREL

14. What does this have to do with cities? • They started it… • 1992: Aachen introduced 20-year PV FIT at $1.34/kWh (!) • PV will grow: “if the operators of solar facilities were paid for the electricity they fed into the grid at a price that would cover their costs just as at any other power plant.”

15. Source: Rickerson, based on Solarenergie-Förderverein (1994)

16. The First Steps in the US? • Gainesville, FL (32 MW) • Sacramento, CA (100 MW) • San Antonio, TX (5 MW) • Marin County, CA (2 MW) • NIPSCO, IN (30 MW) • Consumers Energy, MI (5 MW) • TOTAL: 166 MW

17. Are FITs right for your city? • Are you served by a municipal utility? Create your own policy! • Does your state have a FIT law? Position your municipality to go after it! • Is your investor-owned utility looking to innovate? Partner up and create a new FIT! • None of the above? There are other options…

18. CLEAN PROGRAMS FOR US CITIES AND GAINESVILLE’S FEED IN TARIFFDECEMBER, 2011 Pegeen Hanrahan, P.E.

19. Local Government Actions • Local Governments manage: • Transportation • Infrastructure • Land use and zoning • Building codes • Landscaping • Waste management • Land conservation • Power generation

20. Gainesville Home to the University of Florida (Gators) Fifth largest university in the United States, 50,000+ Also home to Santa Fe College, 17,000+ Low tax base - rely heavily on municipal utility GRU Transfer $36.4 million per year from GRU to General Government

21. Gainesville City population of 130,000 More than 60 square miles 14th largest city in Florida County population of almost 250,000 and 930 square miles

22. Our Focus on Saving Energy, Increasing Renewables, Creating Jobs, Reducing Carbon Requires ambitious action, particularly given our population growth since 1990. Four key strategies: Energy conservation Energy supply Transportation Land use planning

23. US Mayors Climate Protection Agreement Signed by 78 Cities in Florida, 1054 Nationwide

24. Meeting Kyoto by 2013

25. A Three Pronged Approach 1. Maximize energy efficiency. Gainesville has been investing approx. $5.6 million per year in rebates and incentives for insulation, HVAC, lighting, roofing, water heating, and many other options. GRU matches business investment on a 1-for-1 basis, up to $100,000 per site. 2. Dramatically increase solar deployment, up to 32 MW by 2016. 3. Shift from a power purchase contract with Progress, replace with 100 MW biomass plant using waste from forestry, urban tree trimming.

26. Comparison of Annual Carbon Reduction Impacts by 2013 • Biomass Power Plant 334, 219 • Energy Conservation Programs 177,650 • Traffic Light Synchronization 82,701 • Acquiring Land and Development Rights 31,824 • Repowering Natural Gas Plant 31,801 • Combined Heat and Power Plant 22,557 • Landfill Gas to Energy Plant 19,678 • Solar Photovoltaic Electricity 7,682 • LED Traffic Signals 2,967 • Total 711,079 In Metric Tons CO2

27. Public Utility, Public-Private Partnerships Key

28. Gainesville’s Renewables Revolution • In 2009 Gainesville became the first city in the United States to adopt a feed-in-tariff (also called CLEAN) policy to encourage development of renewable energy • Since then there have been hundreds of new solar installations, with a total installed capacity now approaching 9 MW, an increase of over 2600%. • We have become a model for other municipal utilities and some states.

29. Gainesville Adopted the First True Feed-in-Tariff (CLEAN Program) in U.S. Feed-in Tariffs Best to Deal with Climate Change Say IPCC Working Group • FITs Least Costly--Most Competitive Mechanism Says Climate Researchers • November 8, 2011 • The 135-page report by the Intergovernmental Panel on Climate Change, makes it clear that the overwhelming weight of academic studies conclude that feed-in tariffs--or fixed-price mechanisms--perform better at delivering renewable energy quickly and equitably than quota systems, such as Renewable Portfolio Standards in the US or the Renewable Obligation in Britain. This is not the unsurprising conclusion from a surprising source: the IPCC's Working Group III on Renewables.

30. GRU provides 20 year fixed price contracts to solar investors Solar investors finance, fund and build projects, feed energy into grid GRU adds solar costs to all retail customers’ fuel adjustments GRU pays solar investors fixed rate for energy produced for 20 years

31. Why Solar? • Customer survey of 400 residential customers Would you support or oppose GRU’s efforts to encourage solar energy investments in your community if it would add one dollar or less per month to all customers’ utility bills? Support: 75 percent • Strong community environmental ethic • Largest single source of energy on planet • Great faith in continued advances in cost-effectiveness

32. How does our FIT work? • Cap of 4 MW a year to manage rate impact , hit first year’s capacity limit two days prior to implementation date of March 1 • Capacity queue filled through 2016 for 32 MW • Backed by excellent credit of our public utility: “AA” rated by Moody’s, Fitch and S&P

33. CLEAN-Gainesville Seeds a US Solar Revolution

34. Solar Benefits Not Just Environmental • Job creation • Energy independence • Fuel diversity, reliability and security • Democratizing the grid • Civic pride and publicity • Contributing toward a green industry economic development cluster • Building our innovation reputation

35. Indirect Benefits • New solar companies and business models came to Gainesville • Capital infusion into community • New solar-friendly zoning rules • Solar print and radio advertising • Dramatic improvement in $/watt • 2008 ~$8.00/watt • 2010 ~$6.50/watt • 2011 ~$5.30/watt • 2012 Less than $5/watt • New market in leasing rooftops

36. Indirect Benefits • Invited by the White House Office of Intergovernmental Relations to be on a Panel at the U.S. Center in the Bella Center in Copenhagen • Named a Green Global Capital Challenge City by Carbon War Room • Gainesville Chamber of Commerce has embraced green tech

37. Commission “Signing Day”

38. Feed in Tariffs Deliver Results Over 50% of Wind Worldwide Over 75% of Solar PV Worldwide Over 90% of Farm Biogas Worldwide Paul Gipe, Windworks.org

39. With No RPS, No Carbon Laws (YET….) We will meet Kyoto Standard by 2013 Fuel Mix 2013 (Reduced Overall Demand): 62.6% Coal (same production capacity) 10.4% Natural Gas (cut in half) 5.2% Nuclear (same) 0% Oil (eliminated) 22% Renewable Energy 0% Purchased Power (eliminated) Our costs are comparable to other like utilities….

41. Thank You! Contact: Pegeen Hanrahan, P.E. PegeenHanrahan@aol.com 352-665-5939 mobile www.communityconservationsolutions.com

42. Local CLEAN Programs Driving Renewables and Economic Benefits at the Local Level Craig Lewis Executive Director Clean Coalition craig@clean-coalition.org

43. Clean Coalition – Mission and Advisors MissionTo implement policies and programs that transition the world to cost-effective clean energy now while delivering unparalleled economic benefits Clean Coalition – Mission and Advisors Board of Advisors Felix KramerFounder, California Cars Initiative Governor Bill RitterDirector, Colorado State University’s Center for the New Energy Economy, and Former Colorado Governor Terry TamminenFormer Secretary of the California EPA and Special Advisor to CA Governor Arnold Schwarzenegger Jim WeldonCEO, Solar Junction R. James WoolseyChairman, Woolsey Partners, andFormer Director of the CIA Kurt YeagerED, Galvin Electricity Initiative Jeff AndersonED, Clean Economy Network Josh BeckerGeneral Partner, New Cycle Capital Jeff BrothersCEO, Sol Orchard Jeffrey ByronFormer Commissioner, California Energy Commission Rick DeGoliaExecutive Chairman, InVisM, Inc. Mark FultonManaging Director, Global Head of Climate Change Investment Research, DB Climate Change Advisors, a member of the Deutsche Bank Group John GeesmanFormer Commissioner, California Energy Commission Patricia GlazaPrincipal, Arsenal Venture Partners L. Hunter LovinsPresident, Natural Capitalism Solutions Dan KammenChief Technical Specialist for Renewable Energy and Energy Efficiency, World Bank Fred KeeleyTreasurer, Santa Cruz County, and Former Speaker pro Tempore of the California State Assembly

44. Ultimate Clean Coalition Vision

45. What is Holding Renewables in U.S. Back? • Technology solutions are ready • Capital is swarming • POLICY IS MISSING • It is hopefully coming though, via: • SB32 – statewide CLEAN Program in California • DSIS / Rule 21 Interconnection Reform in California + FERC • Local CLEAN Program Guide for local jurisdictions • Policy needs to solve the top three barriers to project development: • Procurement – getting contracts to sell energy to utilities • Interconnection – getting projects interconnected to the distribution grid • Financing – getting projects financed

46. U.S. Policy Gap for Clean Local Energy National policies focus on removing barriers for large-scale renewable power facilities and infrastructure. State and local net-metering policies promote small-scale renewables: • Net-metering is designed to reduce a utility customer’s electric bills • Net metering is not designed for owners of commercial and multi-tenant properties (where tenants pay the utility bills) • Annual on-site energy often caps net-metering project sizes • Investors and lenders find “revenue” from a utility customer’s energy savings from net-metering far less attractive than a true revenue stream from a utility

47. What Does Policy Need to Do? • Focus on Wholesale Distributed Generation • aka Wholesale DG or WDG • Implement CLEAN Programs to overcome top three barriers to renewable energy project development • Let private capital transform the energy industry • Energy industry is like telecom industry 30 years ago • Policy innovation needed to drive technology innovation and capital flows

48. Superior Value of Wholesale DG Solar Solar Markets: Germany vs California (RPS + CSI + other) Sources: CPUC, CEC, SEIA and German equivalents. Germany added 28 times more solar than California in 2010. Even though California’s solar resource is 70% better!!!

49. CLEAN Programs Defined (FITs + Interconnection) • CLEAN Features: • Standard and guaranteed contract between the utility and a renewable energy facility owner • Predictable and streamlined distribution grid interconnection • Predefined and financeable fixed rates for long durations • CLEAN Benefits: • Removes the top three barriers to renewable energy • The vast majority of renewable energy deployed in the world has been driven by CLEAN Programs • Allows any party to become a clean energy entrepreneur • Attracts private capital, including vital new sources of equity • Drives local employment and generates tax revenue at no cost to government

50. Making CLEAN Programs Easy • Targeting communities and individual utilities with Local CLEAN Program Guide • Targeting states with to-be-developed State CLEAN Program Guide • Accessible to all via free download at Clean Coalition website